Unilever Nigeria slashes dividend by 92% as profit drops by 49%

Unilever Nigeria Plc is reducing its dividend payout from N4.73 billion to N378.3 million following a steep decline in the performance of the company. A dividend recommendation released by the board of directors of the conglomerate showed that shareholders would receive a dividend per share of 10 kobo for the 2014 business year as against N1.25 received for the 2013 business year.

Key extracts of the audited report and accounts of Unilever Nigeria for the year ended December 31, 2014 showed declines in the top-line and the bottom-line. While sales were tepid, the bottom-line performance was however worsened by significant increase in finance charges.

Turnover dropped by seven per cent from N60 billion in 2103 to N55.75 billion in 2014. Interest expense, otherwise known as finance charges, however rose by 65 per cent from N1.16 billion to N1.91 billion. This further constrained the profitability of the conglomerate as pre-tax profit dropped by 58 per cent from N6.79 billion to N2.87 billion. After a 78 per cent reduction in tax provisions, net profit after tax dropped by 49 per cent to N2.41 billion in 2014 as against N4.72 billion recorded in 2013.

Earnings per share consequently dropped from N1.25 in 2013 to 64 kobo in 2014. The contraction also affected the company’s balance sheet as shareholders’ funds dropped by 20 per cent from N9.35 billion to N7.48 billion.

Shareholders of the company are expected to meet in May to review its performance and consider the recommended payment.

The audited report came on the heels of the move by Unilever Overseas Holdings, the United Kingdom-based foreign core investor, to acquire additional equity stake in the Nigerian subsidiary in a transaction valued at about N43 billion or £144.5 million.

Unilever Overseas Holdings has already approached the board of directors of Unilever Nigeria Plc about its intention to make an offer to increase its equity stake in the Nigerian company from 50.04 per cent up to a maximum of 75 per cent. The foreign core investor promises to maintain Unilever Nigeria’s listing on the Nigerian Stock Exchange.

Unilever Overseas Holdings has appointed Citigroup Global Markets Limited and Chapel Hill Advisory Partners Limited as its financial advisers on the proposed transaction.

The Nation had reported that Unilever Overseas Holdings proposes to acquire about 944.47 million ordinary shares in Unilever Nigeria at an intended offer price of N45.50 per share in cash. Unilever Nigeria opened this week at the NSE at N34 per share.

The proposed offer price represents a premium of 33.8 per cent on the company’s opening price today and a premium of 33.2 per cent on the three-month volume weighted average share price. It is intended that the proposal would be effected by way of a tender offer, by giving any shareholder who elects to sell some or all of their shares in Unilever Nigeria the opportunity to do so.

The proposed acquisition is however still subject to the prior approval of the Nigerian Stock Exchange and the Securities and Exchange Commission (SEC).

While noting that it has not reached any definitive agreement to proceed with the proposal, Unilever Nigeria has indicated that the formal offer documentation will be posted to shareholders as soon as the approvals of all the regulators are obtained.

Unilever Overseas reserves the right not to proceed with the proposal or to vary the terms of the proposal in any way and no binding offer will be made in respect of any securities until Unilever Nigeria has announced its final results for the year ended December 31, 2014 to the general public.